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	NOTICE OF THE STATE ADMINISTRATION OF TAXATION ON THE INCOME TAX OF FINANCIAL AND INSURANCE ENTERPRISES

	(No.960 [2002] Guo-Shui-Han promulgated on and implemented as of November 7, 2002)


SUBJECT : CORPORATE TAX; FINANCIAL AND INSURANCE ENTERPRISES
ISSUING DEPARTMENT : STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 11/07/2002
IMPLEMENT DATE : 11/07/2002
LENGTH : 377 words
TEXT :

In order to enhance the risk-resisting capacity of financial enterprises, to promote financial enterprises to develop soundly, and in light of the problems concerning collection of enterprise income tax reported by the localities, several policy issues concerning financial and insurance enterprises are hereby further clarified as follows:

I. Disposition of the income tax on loan interest income of financial enterprises

(1) For the loans granted by financial enterprises, the interests shall be computed on time and be included in the current taxable income. If a loan hasn't been repaid within 90 days after maturity (including the extension, hereinafter the same), the receivable interests not collected that occurred before that period (including the 90 days) shall be included in the current taxable income pursuant to the provisions, and the receivable interests not collected that occur thereafter shall not be included in the current taxable income until they have been actually collected.

(2) If the receivable interests not collected which have been included in the taxable income or for which the enterprise income tax has been paid already are not recovered within 90 days after maturity (not including the 90 days), the amount may be off-set in the current taxable income.

II. Insurance agent commission deduction before tax

(1) Insurance enterprises shall include full premium income stated in the insurance contracts as part of the taxable premium income and pay the corporate income tax accordingly. The commission paid/payable to insurance agents cannot be directly netted against the premium income.

(2) For the commission expenditures of insurance enterprises, 5% of the total premium income from sales within the valid term of the insurance contracts shall be deducted before taxation on the basis of legal vouchers within 5 years from the day of issuance of the policy; the commission expenditures for the cancelled insurance may not be deducted before taxation. An insurance enterprise shall faithfully provide the local tax authority with the commission computation and distribution statements and other relevant materials of the current year.

III. This Notice shall be put into implementation from the day of promulgation. No tax refund will be granted for those that have been dealt with pursuant to the relevant provisions previously, and these provisions shall be followed in the tax handling of those not handled.